Throughout the entire election season, people on both sides of the political spectrum are concerned about their future. These concerns cover the gambit of economic, cultural, and political. Now that the election is over, people are going to, undoubtedly, continue to feel concern into the new year. The 202 Election has exposed many causes for concern, however here are the 5 leading causes for their anxiety.
We are enjoying lower taxes since 2018 due to "The Tax Cuts & Jobs Act of 2017", was signed into law December 22nd 2017. It was the most significant tax cut since the 1986 Tax Reform Act. The tax cuts have boosted the economy, but with that it has lead to larger deficits and increased the national debt.
The US National debt over $23 trillion (see Us Debt Clock.org), and budget deficit over $1 trillion. Also, if any of the programs being discussed by the Democrat presidential hopefuls get their way, the debt and deficit will increase dramatically.
One of the ways to solve the debt crisis would be to increase tax rates. As most Americans have their retirement savings in qualified plans (IRA's, 401(k)s, etc.), and increase in taxes would impact the after-tax income from these retirement plans.
Another solution to the rising debt would be for the federal government print more money. By printing more money, you could pay down the debt quickly. However, putting more money into the system would lead to inflation.
Inflation has not been an issue for several years. It does not change the size of your retirement account, but it will change how much you can buy with those dollars!
Retirees biggest cost is projected to be health care. Fortunately, seniors have been able to rely on Medicare & Medicaid. With rising deficits it is conceivable that these benefits will be reduced.
With the size of the debt we have today, it is more likely than not that the government will have to use a combination of all 3:
Today the markets feel unstable and volatile. Anytime you make major changes to tax laws, entitlements, are alter fiscal policies, you can expect increased volatility. Young investors with little assets in the market can handle market fluctuations. People at or near retirement cannot.
People are more interested in not losing money versus how much can they gain. After all, Warren Buffet's rules for investing:
Another fear, influenced by the above 4 concerns is running out of money. When social security first came out in 1935, the life expectancy for an average male was less than the retirement age. Today, people are living much longer, therefore the amount of money you need to last through your retirement years is staggering.
No one knows how long they will live, but statistically, it is several years beyond age 65. Outliving ones money is not a comfortable feeling.
There is no way to eliminate the above risks, however, there are products available that can dampen the impact. The insurance industry has a variety of solutions you can consider:
Advisors Resource Company has the experience and expertise to help you with the use of life insurance to mitigate your clients' risks.